A Bahrain-based Islamic investment bank plans to boost its paid up capital to $200 million by the end of 2001 from the current level of $30 million, a newspaper reported Friday, June 29. Investors Bank chairman Sami al-Bader al-Jenaai, quoted in Gulf Daily News, said a likely merger with another financial institution in the region would aim to raise around $70 million.
The remaining $100 million would be injected by existing and new shareholders, including conventional institutions, Jenaai told reporters after the bank held an annual general meeting in Manama on Thursday.
Jenaai said the bank, which has invested $60 million in the Gulf banking hub of Bahrain, posted a net profit of $417,000 in 2000, down from $1.7 million the year before. "Most investment banks suffered huge losses last year, at least we remained in the black," he said.
"And, in the nearly three years of the bank's operations, we have not yet gone full circle in any of our investments and a profit can be realised only if an investment is sold," he said.
Interest is banned under the Islamic banking system, as the Muslim religion forbids usury.
"Murabaha" is a classic practice of Islamic banking, under which a borrower has to pay an extra amount agreed in advance. This amount is regarded as a "reward" for the risk taken by the bank.
Islamic banks also take part in joint investments, sharing in the profits or losses of a business venture. — (AFP)
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